Offshore shareholder decries “toxic’ environment

Investors and business leaders in the United States and Australia say ­government intervention in foreign investment is increasingly being seen as a risk in doing business in Australia.

The American Chamber of Commerce in Australia, which said total US investment in Australia is about $600 billion, the Business Council of Australia, institutional investors and hedge-fund managers, are showing doubts about the Abbott government’s pledge to be “open for business" after it refused to approve the
Archer Daniels Midland
bid for
GrainCorp
.

But GrainCorp’s largest shareholder,
Don Seaton
, who would have made $30 million from the sale, was pleased Treasurer
Joe Hockey
made the casting vote against the takeover.

“Australia is in the enviable position of being the last piece in the global grain puzzle for foreign agribusiness ­companies," Mr Seaton said.

“The next step is to put in place industry-wide structural safeguards to ensure that future approaches by foreign agribusiness may be welcomed without the threat of damage to ­competition in our local industries."

He was backed by Western ­Australian Farmers Federation president
Dale Park
, who said the deal was not in the best interest of growers.

But one US investor said he was considering whether to continue to invest in Australia. “How many times to do I have to get fed up with the Australian government and the Australian politics?" the investor, who owns GrainCorp shares, said. “It’s just becoming more toxic than other countries."

The investor, who declined to be identified, said that after watching deals involving
Woodside Petroleum
,
Oz Minerals
and
AXA Asia-Pacific Holdings
fall over or suffer serious complications, he was beginning to wonder if he could trust the system. “At some point you just have to acknowledge that the Australian government, whether it’s Labor or Liberal, simply can’t be trusted," the investor said.

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American Chamber of Commerce in Australia chief executive
Niels Marquardt
expressed concern about the message the decision would send to other potential foreign investors.

Mr Marquardt, until recently the US consul-general in Sydney, said the US was the largest source of foreign investment in Australia, with a stock of foreign direct investment of almost $150 billion. When portfolio investment was included, total US investment in Australia was more than $600 billion.

“Like many others, AmCham had been watching this particular investment application carefully, knowing it would inevitably have a real impact on American and foreign perceptions of Australia as a place to invest," he said.

“We recognise that this is the only one of 131 significant foreign investment applications that has been denied, but nonetheless, we are concerned about its impact," Mr Marquardt said.

BCA chief executive
Jennifer Westacott
said Mr Hockey’s rejection of the ADM bid “risks undermining the federal government’s statement that Australia is open for business".

Ms Westacott highlighted Mr Hockey’s contradiction of the Australian Competition and Consumer Commission’s finding there was unlikely to be less competition from the takeover.

The WA Farmers lobby backed the decision, saying while foreign capital in agriculture was welcomed, in the case of a GrainCorp takeover, there were specific issues surrounding competition which were concerning. “It would not have been in the best interests of growers to have competition eroded away by the acquisition," Mr Park said.

The WA Farmers grains section, through the National Farmers’ Federation Grains Policy Council, has long given its support to farm organisations in the eastern states, where GrainCorp is based.